from the the-system-is-broken dept

Via Jeff Roberts at Gigaom, we learn of yet another patent trolling operation: Parallel Iron, which has sued a bunch of tech companies and banks because of the file systems they use. It filed a few lawsuits in April, most of which were refiled in June, and then it just filed a bunch of new ones as well. Some of the filings are more specific about the file system -- such as in the Facebook and Amazon cases, where it specifically calls out the popular Hadoop Distributed File System (HDFS). In the Oracle suit, it's parallel Network File System (pNFS). For what it's worth, EMC appears to be the only company sued who tried to first sue for declaratory judgment in a different venue, but it was still sued with all the others in Delaware on the same day that EMC filed its own suit in Massachusetts.

While most patent infringement lawsuit filings tend to be pretty matter of fact, this one goes immediately for the hyperbole stick, suggesting that the four inventors on these patents made some amazing breakthrough, and everyone else copied it:

In this technological age, we take for granted the ability to access tremendous
amounts of data through our computers and the Internet, a process that seems effortless and
unremarkable. But this apparent effortlessness is an illusion, made possible only by
technological wizardry. The amount of information that is used by many companies has
outstripped the storage capacity of individual memory devices. The information must be stored
across hundreds or thousands of individual memory devices and machines. The ability to keep
track of information as it is distributed across numerous devices and machines, while still
allowing users to retrieve it seamlessly upon request, is a feat that was impossible until recently.
It was made possible by the innovations of technological pioneers like Melvin James Bullen,
Steven Louis Dodd, William Thomas Lynch, and David James Herbison.

Bullen, Dodd, Lynch and Herbison were, among others, members of a company
dedicated to solving the difficult problems that limited the capacity of computer technology and
the Internet, particularly problems concerning data storage. These engineers found innovative
solutions for these problems and patented several technologies for data storage, including the
ones at issue in this case. Many of the data-access feats we take for granted today are possible
because of the data-storage inventions of Bullen, Dodd, Lynch and Herbison.

Considering the claims that these four individuals were brilliant "technological pioneers," you would think that searches on their names would turn up story upon story about their accolades, presentations at tech events, celebrations in their honor, etc. But, of course, that's not the case. All you seem to find are stories about these lawsuits, or information about their patenting activities. Maybe my search skills aren't up to par, or maybe these four guys were not "technological pioneers," but merely got some broad patents on the same basic solution that lots of folks skilled in the art were figuring out at the same time. The idea that such things wouldn't exist but for Bullen, Dodd, Lynch and Herbison is pretty ridiculous.

In case you're wondering, the patents in question are 7,197,662, 7,543,177 and 7,958,388, all of which are for "methods and systems for a storage system." The core of these patents goes back to a 2002 original filing date on the '662 patent. Hadoop and pNFS both show up on the scene around 2003, so it's about the same time. It certainly sounds like a bunch of folks who work with large amounts of data were all coming up with some obvious (to them) solutions. Two of them actually brought stuff to market. The others... well, they're suing.

from the gotta-go-beyond-that dept

We've talked in the past about the importance of copying what other companies do as a business strategy (and just how common it is throughout history, despite the pejorative terms associated with it). But one of the key factors in making "copying" a successful strategy is in knowing how to improve upon what you copy. It's why Apple has been so successful over the years. Yes, it builds on the ideas of others, but does so in a way that improves them and makes them more usable.

Yet, we always hear of people fearing companies copying one another (sometimes mistakenly calling them "thieves" or decrying their unoriginality). And yet, it seems pointless to worry about such things. Even as people always seem to be afraid of big companies with big budgets copying others, history has shown time and time again that this almost never works. That's because merely copying what someone is doing not only takes you "where the puck has been" rather than "where the puck is going," but also has you focused solely on the outward, superficial aspects of what makes another product or service successful. What's missing is an awful lot of details in the background -- the knowledge of why certain things work and don't work, as well as how users and customers actually interact with the product. Such copying almost inevitably fails.

With that said, it seems like Samsung's plan to make its own Facebook, using the rather telling code name "Samsung Facebook" seems destined to fail for exactly that reason. The very fact that they're internally calling it "Samsung Facebook" shows that they're already aiming at a target in the past, rather than the future. It's the exact wrong approach and almost guarantees that whatever comes out of it will be seen as pointless by the time it launches. Learning from what others do is a useful strategy. Copying what others do can be a very important business strategy -- but it has to be done with the goal of exceeding where those others are heading, not in replicating what they've already done. That's a recipe for expensive failures.

from the share-the-value dept

As I discussed in my Hacking Society post, one of the things I'm thinking a lot about these days is how to measure value that isn't directly monetized. There's a related aspect to all of this, as well: recognizing that when you create value, you don't have to monetize all of it directly yourself. Historically, in economics, they've talked about things like "externalities" and "spillovers" when discussing parts of the economic value chain that can't be controlled or monetized directly. However, it seems like a growing number of economists are realizing that this undersells what's happening. Externalities and spillovers often feel like a small thing -- a tangential bit tossed off to the side. But when you're dealing with information and digital goods, it's important to recognize that these things can be a major part of the market, and may not be controllable at all. And that may be a good thing.

In the discussion we had about Craigslist, one of the points was that while Craigslist itself only "captures" a small part of the value it's unleashed, that's not necessarily bad. First, it's good because much of that value to go out to the users of Craigslist themselves. That's why they appreciate and use Craigslist in the first place. If Craigslist tried to capture all of that value itself, people would stop using Craigslist. Now some may argue it becomes a different situation when you have third parties monetizing some of that value, but I disagree. When you look at the most successful companies in the world, they're often platforms -- they create value and capture some of it, but also allow much of that value to be monetized by others.

Look at Microsoft, Apple, Google and Facebook. All of them created a massive amount of value -- and all have become phenomenally successful companies -- but all of them did so by also letting others monetize large portions of the value they created. It's how you build a more long-lasting ecosystem from which you can continue to profit from over time. If you seek to capture all of the value yourself, you don't last very long.

“But you’re heading down a route we’ve seen before – giving the opportunity to extract value to somebody else in an area that should be our own – so Flipboard is problematic.”

Of course, that ignores the fact that Flipboard -- an aggregator app -- provides its own value as well. People don't use Flipboard just because it includes content from The Economist. They use it because of the overall experience and the fact that it aggregates content from lots of different sources in one place. As much as The Economist, or any publication, might like to "own" the reader, that's not necessarily what the reader wants. Letting others "extract" some of that "value" can actually be a really good thing. Flipboard provides a useful service for The Economist in not only experimenting with new ways to aggregate and present content -- from which The Economist can learn -- but also in potentially expanding The Economist's audience as well, feeding much greater value back into that ecosystem.

Yes, companies need to look at the overall market and see where it is they can extract value -- but you have to wonder about those who claim eminent domain over certain parts of the marketplace. Letting others extract some (and perhaps lots) of that value can have tremendous benefits for those who do so.

from the functional-forgeries dept

M-CAM's analysis of the Yahoo/Facebook patent nuclear war has some interesting points. It's worth checking out the full thing, but I wanted to call attention to two them. First, in showing just how ridiculous the patent situation is in the social networking space, M-CAM looks just at the 10 patents that Facebook is asserting in its counterclaims against Yahoo, and discovered that there are over 30,000 related patents that cover similar aspects -- many of which have been around for a while. Notably, IBM (who just sold Facebook a bunch of patents) holds the largest batch of such patents, but that's only 270 patents, meaning these patents are really widely spread out.

In other words, there's a massive patent thicket in the social networking space. I don't how see anyone can legitimately suggest that the patent system is working when someone developing a social network has to be concerned about the fact that they might get sued over upwards of 30,000 patents. If anything, this is just another example of the point that Tim Lee and Christina Mulligan recently made in showing how it's mathematically impossible to avoid infringing on patents if you're developing software these days. No sane person thinks that 30,000 patents make sense for social networking.

As the report notes, a very large number of these patents are "functional forgeries" in that they cover stuff that's in other patents. Really what this goes back to is the fact that the patent system relies on patent examiners to magically know what's new and non-obvious. But, if it's impossible for those who actually work in the space to know about the 30,000 related patents, how do you think a patent examiner does it? The answer is they don't. Patent examiners simply don't scale, and that's a huge problem with the way the system is designed today.

And that brings us to the second point in the M-CAM report, which highlights just how ridiculous the process is to get patent examiners to approve a patent can be. M-CAM looks specifically at the process that got Patent 8,150,913 approved (which happened the same day that Facebook used it in the lawsuit). The report notes that the 913 patent was originally rejected by patent examiner Bharat N. Barot, but the filer amended the claims, and the second time around Barot found them suddenly worthy of a patent. You might think that the changes to go from non-patentable and obvious to patentable and non-obvious would be pretty big. Not so much. M-CAM puts the original claim 1 and the approved claim next to each other and highlights the only difference in blue, which was a ridiculously minor word change towards the end.

Original Submitted Claim 1 of US 8,150,913
Dated: August 22, 2011

Issued Claim 1 of US 8,150,913
Dated: April 3, 2012

1. A computer system that provides a service for controlled access
over a network to user profiles having associated image content
provided by registered users of the service, the computer system
comprising:

a networked server system accessible by remote user devices via the
network, the networked server system comprising at least one
processor and at least one memory; and

at least one database accessible by the networked server system and
configured to store the user profiles of the registered users, image
content items associated with the user profiles, and relationship data
that specifies access relationships established between the registered
users;

the networked server system being programmed, via executable
program instructions, to:

allow users to register with the service and the registered users to
each create a user profile comprising profile information about the
respective registered user and a plurality of image content items of
data types corresponding to one or more of photo data or video data;
allow a first registered user to identify other registered users via a
user interface and to indicate a desire to establish an access
relationship with the other registered users, wherein each access
relationship allows the first registered user to access a user profile of
an identified other registered user via the user interface and image
content items of the identified other registered user via the user
interface;

establish access relationships between the first registered user and
the other registered users without requiring the other registered
users to individually approve the access relationships;
allow the first registered user to select from the user interface the
user profile of another registered user with respect to which an
access relationship has been established with the first registered user,
in response to which the networked server system provides the
selected user profile for display to the first registered in the user
interface, wherein the selected user profile includes representations
of at least some of the image content items associated with the
selected user profile;

allow the first registered user to select and view one of the image
content items in the user interface; and

allow the first registered user to interact with the selected image
content item via interactive controls of the user interface.

1. A computer system that provides a service for controlled access
over a network to user profiles having associated image content
provided by registered users of the service, the computer system
comprising:

a networked server system accessible by remote user devices via the
network, the networked server system comprising at least one
processor and at least one memory; and

at least one database accessible by the networked server system and
configured to store the user profiles of the registered users, image
content items associated with the user profiles, and relationship data
that specifies access relationships established between the registered
users;

the networked server system being programmed, via executable
program instructions, to:

allow users to register with the service and the registered users to
each create a user profile comprising profile information about the
respective registered user and a plurality of image content items of
data types corresponding to one or more of photo data or video data;
allow a first registered user to identify other registered users via a
user interface and to indicate a desire to establish an access
relationship with the other registered users, wherein each access
relationship allows the first registered user to access a user profile of
an identified other registered user via the user interface and image
content items of the identified other registered user via the user
interface;

establish access relationships between the first registered user and
the other registered users without requiring the other registered
users to individually approve the access relationships;
allow the first registered user to select from the user interface the
user profile of another registered user with respect to which an
access relationship has been established with the first registered user,
in response to which the networked server system provides the
selected user profile for display to the first registered user in the user
interface, wherein the selected user profile includes representations
of at least some of the image content items associated with the
selected user profile;

allow the first registered user to select and view at least one of the
image content items associated with the selected user profile in the
user interface; and

allow the first registered user to interact with the selected image
content item via interactive controls of the user interface.

Yes, the words in blue are apparently the sum total of the difference between something that's unpatentable and something that gives you a monopoly you can sue over.

from the others-might-beg-to-differ dept

Nearly two years ago, we took part in a wider discussion over the question of why there was no billion dollar pure play open source company. Much of the discussion, not surprisingly, focused on Red Hat, seeing as it's the largest of the pure play open source companies, and some had been complaining that it had not yet reached $1 billion in revenue, even as proprietary software players were able to earn much more than that. We highlighted, first, that a direct comparison didn't make any sense, because the business models were so different. The very nature of a company like Red Hat is to shrink the costs one has to pay, such that the market is redefined. Quoting Red Hat's CEO speaking to Glyn Moody:

He said that he did think that Red Hat could get to $5 billion in due course, but that this entailed "replacing $50 billion of revenue" currently enjoyed by other computer companies. What he meant was that to attain that $5 billion of revenue Red Hat would have to displace software that currently costs $50 billion. Selling $50 billion-worth of software -- even if it only costs $5 billion -- is somewhat hard, which is why it will take a while to achieve.

And that's a key point. The markets are very different. But I think there was an even more important point later on in that discussion, which is that it's wrong to think of just "pure play" open source companies as the open source market. It's really the equivalent of defining "the music industry" as solely "the number of CDs sold." That doesn't paint the entire picture at all. Because, as we've seen, as music has become more available (both in authorized and unauthorized means), it's built up the much wider "music industry" in massive ways -- jump-starting huge shifts in the industry.

Similarly, the importance and impact of the "open source market" is not in the companies offering up open source software, but in the companies using open source software to offer amazing things to the world. In other words, I'd argue that companies like IBM, Google and Facebook are clearly "billion dollar open source companies" (actually, much, much more than just a billion) -- because they all use open source software as the key component and key resource in building their business. Just as other parts of the music business used free music to boost their revenue, companies that used open source software built massive new markets and grew their own revenue streams.

Given that, I know there's a lot of folks talking about Red Hat finally actually hitting that $1 billion revenue milestone -- and it is a milestone worth noting. However, I think it's wrong to suggest that Red Hat is therefore the first "billion dollar" open source company. In fact, just as IBM, Facebook and Google really make their money by leveraging open source software to do (and sell) something else, much of Red Hat's revenue really comes in an ancillary manner to the software as well: from selling the service that goes with it. It's great that Red Hat is doing well, and certainly it presents yet another useful data point to argue against those who argue there's no money to be made if your key "product" is free, but I think it's unfair and misleading to claim that it's the first billion dollar open source company.

from the now-where's-my-membership-card? dept

We just wrote about Yahoo admitting to the world that it was done and cooked as an innovative company when it chose to threaten to sue Facebook over patents. Plenty of other commentators wrote similar stories. We've all seen this pattern before: Company that used to lead the market, but has become an also-ran, suddenly pops up with patents to sue the hot new thing. It's a sad statement of a company that just can't compete any more. However, in a really, really bizarre screed, hedge fund investor Eric Jackson seems to suggest there's a crazy conspiracy of hypocritical bloggers making these statements.

It should be noted that Jackson has a bit of a reputational stake here: four months ago, he specifically called on Yahoo to do exactly what it's doing now. So, now he seems to want to defend this turf, but his argument is bizarre and nonsensical. It starts off with a crazy conspiracy theory about how Silicon Valley bloggers have a special "clubby" relationship with VCs:

If you’re a blogger, you play nice to keep future sources happy (unless you’re someone like Kara Swisher and reached another level of appreciation/admiration). If you’re a VC, what makes your $10 million check more valuable than the next guy’s? Of course, you’re going to be nice. It’s all about access for these non-engineers. If you’ve been black-balled in Palo Alto – whether you’re a VC, blogger, or PR person — what advantage do you have?

Considering that I am a "Silicon Valley blogger" and have been around and doing this longer than anyone he mentions, I find this curious. I know it's become a popular talking point lately -- this supposed close relationship between VCs and bloggers -- but I seem to get by just fine without such relationships (yeah, I know some VCs, but I don't recall ever using one as a source, other than on information they stated publicly -- so not as a "scoop"). As for "what advantage" you have, if you don't have VCs feeding you information, that's a ridiculous question. Plenty of blogs have advantages in the community of readers they have and the analysis and insight they provide. Jackson seems to believe that the way a blogger can provide value is by being first. He's wrong.

He follows this up with an argument that doesn't make any sense at all -- something about the fact that new nominees to Yahoo's board are all from New York... and that means something crazy about the "negative reputational effects" it would have on anyone in Silicon Valley to serve on Yahoo's board. I have no idea what this means. I can't think of any negative reputational effect it could possibly have. He also mentions the "open secret among Silicon Valley elites that Yahoo! is in great need of reform." Wait. That's an "open secret"? How about it's not a secret at all. It's common sense to anyone who has watched Yahoo fade from glory and fail to actually keep up in the marketplace. Suggesting all this stuff about "open secrets," "Silicon Valley elites," and "reputational effects" just makes it sound like there's a conspiracy going on where there's none. Someone has hit the paranoia sauce hard.

What does all of this have to do with patents? I have no freaking idea. And neither does Jackson, who transitions with the grace of a rhinoceros ballerina, by simply switching to the patent question and insisting that this somehow "proves" the nonsense he just spouted.

But the vocal, nonsensical, and hypocritical response this morning to Yahoo! serving Facebook notice that it’s in violation of 10 - 20 key patents by several Silicon Valley watchers takes this clubbiness to new heights.

A bunch of veteran Silicon Valley observers, who know damn well what Yahoo's move is a sign of, isn't evidence of any "clubbiness." It's evidence that a bunch of people who know this space have seen this train wreck before. He then attempts to explain the "two big problems" with people pointing out that Yahoo's actions are a bad sign.

The merits of their assertion that anyone claiming intellectual property rights is somehow a “troll” and “not innovating.” When did we decide that IP is reprehensible? I missed that lesson at blogging school.

Er. It's not "blogging school." It's just Silicon Valley (and history) in general. We believe in innovating in the marketplace, not fighting in the courtrooms for the most part. A study last year suggested that somewhere between 70% and 80% of folks in Silicon Valley are generally distrustful of patents. I learned that by paying attention to reality. Not blogging school.

Should no company be able to “innovate” something without it immediately being copied by dozens of other firms? Is mass copycatting preferable to having rule of law saying someone should be able to come up with a new idea — as recognized by an impartial third party — and then have that idea protected for some period of time (not forever)?

Actually, there have been studies and research that suggest that despite Jackson's mocking rhetoric, indeed, yes, the ability to copycat is preferable to monopolies on ideas. Why? Because merely being a copycat isn't particularly effective. First movers have an advantage, and you win in the marketplace not by copying, but by out-innovating and providing something better. Even better, as others copy you and try to out innovate you, you get to learn from them too. And thus, innovation accelerates. That's a good thing.

If Sarah Lacy et al. find IP so reprehensible, I would ask them: are you arguing for Silicon Valley to be a place much closer to China where Internet firms can engage in mass copycatting immediately as a normal course of business? Is that what you want? Is that what your sources at Facebook, LinkedIn, Digg, and all the other great Web 2.0 companies of the future want?

It's already the normal course of business for the most part. We see copying happen all the time, and history has shown that's where much of Silicon Valley's innovative nature comes from. And I have no idea what the sources at these companies want -- but in general, yes, most of the folks I know in Silicon Valley seem to prefer to compete in the marketplace. I was at a roundtable of entrepreneurs not too long ago, meeting with some federal officials, discussing patents, and the officials seemed to expect that everyone would talk about the importance of more patents. Instead, every single entrepreneur talked about how patents were a distraction and a hindrance to their business. Multiple entrepreneurs talked about how they didn't care if people copied them, because they understood their own customers better and were already ahead in the market. Jackson seems to ignore all of this.

The obvious hypocrisy between these Valley-types criticizing Yahoo! and yet whistling past the Cupertino graveyard with Apple is what’s really galling to me. If all of you are so incensed by a company protecting its IP rights, why are you not picketing in front of Tim Cook‘s house? Hasn’t Apple pursued this line of defense/offense for its business most aggressively of anyone in the Valley?

It goes back to clubbiness. One of the rules of the Valley is that no one criticizes Apple (or Google for that matter).

Geez. I guess all those blog posts above don't exist. And, honestly, that's just crazy talk. I know tons of "Silicon Valley bloggers" who criticize Apple (and "Google for that matter") all the time. Just for the hell of it, since all the links above are about Apple, herearesomecriticizingGoogletoo, for "that matter."

Does Jackson even read the blogs he's slamming?

And for those saying that Yahoo! caved to Wall Street pressure to launch a patent fight now against Facebook prior to its IPO, this avoids looking at some key facts. Starting in 2005, Yahoo! began to make a concerted effort to develop its patent portfolio. According to PatentVest, Yahoo! was granted 20 patents in 2002 by the US PTO, 50 in 2006, 80 in 2008, 300 in 2010, and 325 in 2011. One of the key IP lawyers at Yahoo! in 2006 left the company shortly thereafter to take a more senior job at Google doing the same thing.

All companies in Silicon Valley recognized this trend and began investing in protecting their IP starting in 2006. Yahoo! was one of many doing this. When Yahoo! began growing its portfolio, it was before anyone realized Facebook was going to be the size it is today. Of course, Yahoo! famously tried to buy Facebook for $1 billion in 2006 — which was seen as an outlandish number to pay at the time by the blogosphere.

This is a convenient rewriting of history. While he's right that many companies in Silicon Valley started investing heavily in obtaining patents around that time, it wasn't to use them as an offensive weapon -- but as a defensive weapon against silly lawsuits from dying companies... like what we're seeing with Yahoo today.

Which brings us to today. Yahoo! has a case against Facebook. It might have cases against others in the future. Yahoo!’s owned by its shareholders – not the clubby bloggers of Silicon Valley.

Let the bloggers do what they need to do to protect their self-interests. Yahoo! will do the same.

But that's the thing: this strategy never works. That's what the bloggers were saying. Because we've seen it. The companies that start suing more nimble, more successful competitors over patents, always end up failing in the long run. That's why it's a clear indicator of a company that's done innovating. Breaking out the "sue over patents" folder is a key sign of a company that knows it can't compete. Because when you can beat the competition by innovating, suing over patents is always seen as a waste of time.

Shareholders in Yahoo -- and Jackson admits that he is one -- may get some short term benefits, if it happens to get a chunk of cash from some company, but when a company that fits Yahoo's profile starts suing over patents, it's a clear, clear sign that it's time to short that stock. The company has given up.